CA FOUNDATION: ACCOUNTING · RECTIFICATION OF ERRORS

Rectification of errors and suspense account

Cancel the wrong effect and give the right one. Two-sided errors go between the real accounts; one-sided errors are balanced through Suspense A/c.

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Worked examples

Example 1 · level 1

Sharma Traders finds this error before closing the books: Repairs to building ₹3,300 were debited to Building A/c. Choose the rectifying entry.

Repairs A/c Dr ₹3,300; To Building A/c ₹3,300
Repairs A/c Dr ₹3,300; To Cash A/c ₹3,300
Building A/c Dr ₹3,300; To Repairs A/c ₹3,300
Repairs A/c Dr ₹3,300; To Suspense A/c ₹3,300

Show solution

Revenue expense wrongly capitalised: debit Repairs, credit Building to remove it.
Rectifying entry: Repairs A/c Dr ₹3,300; To Building A/c ₹3,300.

Answer: Repairs A/c Dr ₹3,300; To Building A/c ₹3,300

Example 2 · level 2

Mehta Enterprises finds this error before closing the books: Goods of ₹1,500 returned by Gita were not recorded in the books at all. Choose the rectifying entry.

Sales Returns A/c Dr ₹1,500; To Gita’s A/c ₹1,500
Gita’s A/c Dr ₹1,500; To Sales Returns A/c ₹1,500
Sales Returns A/c Dr ₹1,500; To Suspense A/c ₹1,500
Purchases Returns A/c Dr ₹1,500; To Gita’s A/c ₹1,500

Show solution

A complete omission is simply recorded now: debit Sales Returns, credit the customer. No suspense account is needed.
Rectifying entry: Sales Returns A/c Dr ₹1,500; To Gita’s A/c ₹1,500.

Answer: Sales Returns A/c Dr ₹1,500; To Gita’s A/c ₹1,500

Example 3 · level 3

Sharma Traders finds this error before closing the books: The Purchases Book was overcast by ₹3,250. (A suspense account was opened for the trial balance difference.) Choose the rectifying entry.

Suspense A/c Dr ₹3,250; To Creditors A/c ₹3,250
Creditors A/c Dr ₹3,250; To Purchases A/c ₹3,250
Purchases A/c Dr ₹3,250; To Suspense A/c ₹3,250
Suspense A/c Dr ₹3,250; To Purchases A/c ₹3,250

Show solution

Purchases A/c was debited too much (one-sided error): credit Purchases, debit Suspense.
Rectifying entry: Suspense A/c Dr ₹3,250; To Purchases A/c ₹3,250.

Answer: Suspense A/c Dr ₹3,250; To Purchases A/c ₹3,250